The New Arthurian Economics

Saturday, April 18, 2009

WASHINGTON, April 14 (Reuters) - Federal Reserve Chairman Ben Bernanke said on Tuesday that the U.S. central bank, which has cut interest rates almost to zero, will definitely reverse its monetary policy at some stage to prevent inflation.

The Fed will 'make sure we do raise rates at an appropriate time and make sure we don't leave rates too low for too long, because it can have adverse effects, at least on inflation,' Bernanke told students at Morehouse College in Atlanta.

So if everything works out according to plan, we restore the economy back to where it was a year or two ago, before everything fell apart.

Well, then we'll be in trouble. Because if we get back to that time again, we will only be ripe for economic collapse again. Bernanke must know this. Central to the concept of fixing the economy is the notion of fixing the problem that created the problem. Not just fixing consequences we don't like.

Ben Bernanke has the most thrilling job in America, and I think he's the right man for the job. But I hope he's keeping secrets. Because the things he said at Morehouse College are just more of the same numb-brain, defunct-economist crap that got us into this mess in the first place.